Two weeks ago the Treasury Department announced some changes in an obscure set of rules it maintains for determining the useful life of equipment used in making steel.

Those changes -- in something known as the CLADR (for Class Life Asset Depreciation Range) System for calculating depreciation -- will save the steel industry an estimated $118 million in taxes over the next three years.

The Treasury found that steel making equipment, like so many other things, doesn't last as long today as it used to, and therefore said that steel companies could write it off faster, taking larger deductions each year.

CLADR is hardly a household word in America, and depreciation schedules are not a lively subject. But, as even this relatively minor steel decision suggests, billions of dollars of business taxes depend on them.

The Treasury estimates that rapid write-off provisions already in the law for business equipment are costing the government -- and saving business about $2.5 billion a year in taxes.

Now business groups and supporters in Congress are pressing to have these provisions liberalized further. They say that, if there is a business tax cut next year as expected, it should come in the form of liberalized depreciation rules; they say such rules would stimulate investment.

The Treasury, meanwhile, is constantly being called upon to adjust the existing rules, as it did for steel.

In recent years it made one decision on chemical equipment that saved that industry an estimated $216.5 million over a two-year period. Another decision went in favor of pulp and paper companies, savind them $30 million. A third saved textile companies $2 million.

Not everyone wins, however. In a fourth case, the Treasury's experts found that some aerospace equipment was lasting longer than previously supposed. That industry's taxes went up $28.4 million over a two-year period as a result.

These rulings were reasonably routine -- in the last few years the agency has reassessed the tax lives of equipment for many industries -- and point up the vast amount of discretion the nation's tax collectors have in determining just how much the government will collect in any given year.

The laws permit the government to collect taxes only on a company's profit -- basically the difference between a company's revenues and its costs.

But the determination of what is a cost of doing business is crucial for both tax-writing legislators and tax-collecting bureaucrats.

If a steel company pays a wage or buys iron ore, the outlaws are a cost of doing business in the year they are paid and a tax deduction.

But when the same company installs a steel-making furnace, it will use that furnace over a long period of time, not just during the year it was installed. According to tax laws, the full cost of the new facility cannot be deducted from revenues in the first year of its operation.

Instead, the company must depreciate the cost of that asset, deducting only the portion of the asset that is "used up" during the tax year in question.

Before a company can determine how much of an asset it uses up, it must know how long the asset will be in use.

That is a question the Treasury has wrestled with since 1934, according to Deputy Assistant Secretary for Tax Policy Emil Sunley.

The agency has revised its approach several times and in 1971 adopted the asset depreciation range system. The system recognizes that companies usually buy several pieces of equipment at once and set down guideline lives for the average life of the total investment, recognizing that some pieces wear out earlier than others.

The depreciation range system also permits companies to take the guideline life and vary it up or down by 20 percent.

Most companies choose the shortest life possible under the system, because the shorter the life of the asset, the more tax deductions the companies can take.

In the case of steel, the Treasury said the guideline life for steelmaking facilities will be 15 years rather than 18 years. Because the steel companies can reduce that 15 years by 20 percent, the effective useful life for tax purposes becomes 12 years.

To see the effect of a reduction in guidelines life on a company's tax write-offs, take a hypothetical example. Assume a company bought a $1 million piece of equipment and uses what is called the "straight-line" method of depreciation which assumes the asset is used up in equal yearly amounts throughout its life.

If the useful life is 10 years, the company gets $100,000 a year in write-off for 10 years. But if the life is five years, the tax deduction grows to $200,000 a year. The amount of the eventual write-off is the same, but the impact on the company's cash flow is much more marked with the shorter life.